Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 54.76% of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
54.76% of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Important Notice - Fraud awareness
Important Notice - Scam alert
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 54.76% of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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ECB’s Flexible Policy Stance Boosts the EURO

After the European Central Bank's last interest rate meeting, it was reiterated that monetary policy remained flexible and did not rule out raising interest rates before the year ended. The remarks boosted the Euro, which rebounded from 1.11 to 1.14 against the dollar. The euro rebounded as the dollar fell to the edge of 95. Subsequently, the United States announced the non-farm payrolls data for January, with the country adding  467,000 jobs compared to analysts’ expectations of 150,000 jobs and the previous month’s 199,000 figure. In January, the unemployment rate was 4%, up slightly from 3.9% recorded in December. In addition, the monthly and annual changes in average hourly wages are both increasing. The annual rate increased at an impressive  5.7%, while the monthly rate rose by 4.7% compared to the previous month but was lower than the expected 5.2% increase. Finally, the U.S. employment data improved, and the markets watched the Federal Reserve for any hints on the timing of interest rate hikes. The dollar recovered from a three-week low but failed to rise above the 96-point level.

The high U.S. CPI for January and the number of new unemployment claims announced on Thursday are of significant concern. The annual inflation (CPI) rate is expected to hit 7.2%, while the core CPI is expected to rise to 5.9%. If the results meet expectations, this will be the highest inflation level in the United States in 40 years.  The US government and the Federal Reserve must start acting together to cool down inflation. The market generally expects the Fed to increase the pace and magnitude of interest rate hikes to suppress inflation. It is estimated that the Fed will announce a rate hike in March, and the magnitude may rise to 0.5% instead of 0.25%. The FOMC voting committee may reveal or guide relevant information on the same day.  The Cleveland Fed President's speech on the outlook for the US economy and monetary policy could also shed some light on the same. Suppose more data and information support the accelerated pace of U.S. interest rate hikes. The dollar is expected to resume its uptrend, with an initial target at 96.20 and a potential return to the 97 level. Technically, if the January low of 94.6 is lost, the downtrend will likely extend, with the dollar index dropping to 93.78.

The biggest reason for the high inflation in the U.S. and globally is the soaring international crude oil prices. Recently, U.S. oil futures and Brent crude oil prices rose above $90, respectively, hitting a seven-year high. I believe the Biden administration will speak again at any time, trying to suppress oil prices. The government remarks against the massive problem of high inflation in the United States are awaited by many. If international oil prices are successfully suppressed, it will directly impact the Canadian dollar. As oil prices have continued rising, the US dollar against the Canadian dollar encountered significant resistance before reaching the 1.28 level. If the USD/CAD pair breaks above the 1.2832 resistance level after oil prices fall, we expect the pair to reach the 1.2962 level. Conversely, if oil prices continue rising, the USD/CAD may test the 1.2562 or 1.2502 support level again.

Last Updated: 07/02/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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